Steady employment gains are expected in Utah

Solid economic growth should mean more jobs for Utahns for the first half of 2005, though that growth should begin to wane in the latter months of the year, according to a new report from Zions Bank.

The bank's Small Business Index, released Tuesday, climbed to 102.5 in February from a revised 101.9 in January.

The index measures business conditions from the viewpoint of the Utah small-business owner or manager. A higher index number is associated with more favorable business conditions for Utah's small businesses. The index uses 100.0 for calendar year 1997 as its base.

"Solid U.S. economic growth suggests that steady employment gains are likely to continue during 2005," Jeff Thredgold, economic consultant to Zions Bank, wrote in the report. "We expect a net average gain of 175,000-200,000 net new jobs monthly this year, in line with the 183,000 average monthly gain during 2004. Reasonable job gains should occur even as short-term interest rates continue to rise."

Utah's unemployment rate, the most heavily weighted component of the index, was estimated at 4.6 percent in January (the most recent data available), up slightly from the previous month's revised 4.5 percent. The state's total employment, another key factor in the index, rose by about 35,500 jobs (or 3.2 percent) during the past 12 months, Thredgold reported. During the previous 12-month period, the state gained 35,100 jobs.

Job gains have a positive impact on the index, because they suggest there will be greater income and retail spending.

"Utah job growth right now ranks in the top two or three in the country," Thredgold said. "Our 3.2 percent job growth over the past 12 months, at year end, ranked us No. 2 in the country behind Nevada. It was the strongest job growth in seven years, when measured by percentage gain and the growth in jobs, and we expect solid growth to continue even as the Fed is raising rates — and we expect the Fed to raise rates three more times by June 30."

The U.S. Labor Department reported last week that the national unemployment rate was 5.4 percent in February, up slightly from January's 5.2 percent. Total employment saw a net gain of 262,000 jobs in February, the department reported.

Nationally, Thredgold pre- dicted an economic growth rate of 3.7 percent to 3.9 percent during the first half of the year, with "a modest slowing in following quarters."

The second half of 2005 will "feel more impact of a slight slowing of global economic growth," Thredgold wrote. "The economy will also feel the impact of more tightening moves by the Federal Reserve, on top of the six 0.25 percent moves of the past eight months."

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